Analysis: Microsoft still faces obstacles with Windows 2000

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by Dominique Deckmyn

(IDG) -- Microsoft removed one major obstacle to widespread Windows 2000 adoption last week when it shipped the first service pack for the operating system. But a lack of applications is still holding back many users from upgrading.

Tom Watts, director of information systems at Tosoh America Inc., a chemical manufacturer in Grove City, Ohio, said he will put Windows 2000 Service Pack 1 through its paces before considering rolling it out. "We got killed by Service Pack 2 for NT 4," he said. Watts has implemented Windows 2000 on his company's laptops but is holding back on server and desktop installations.

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Michael Silver, an analyst at Stamford, Conn.-based Gartner Group, advises users to test SP1 with their particular mix of hardware and software and to check with their vendors. "We need a few weeks for [SP1] to prove itself, to see whether it is the [stable Windows 2000] version we have been waiting for," said Silver. Gartner has been cautioning corporations to hold back on widespread server rollouts.

Since the operating system's launch in February, Windows 2000 adoption has been "respectable but certainly not overwhelming," said Dwight Davis, an analyst at Boston-based Summit Strategies Inc. Although Microsoft says Windows 2000 sales have topped 3 million and exceeded internal projections, according to lead product manager Mark Croft, Davis said the vast majority of installations have been on workstations, not servers. (Microsoft doesn't break out the figures.) "And more often than not, it is being deployed for the improved stability [rather than for the new features]," said Davis.

Besides the lack of a service pack - which contains fixes for problems identified with the product so far - users and analysts said several other factors have been holding back Windows 2000.

"One of the biggest things holding us up is [the delayed shipment of] Exchange 2000," said Watts. Exchange 2000 was originally due shortly after Windows 2000 and is now expected to ship in the fall. Several other products that leverage Windows 2000's features are due by the end of the year.

"Applications in general are in limited supply for Windows 2000," said Al Gillen, an analyst at International Data Corp. (IDC) in Framingham, Mass.

But Gillen said Windows 2000 is selling slightly faster than IDC had anticipated when the operating system was launched in February. Microsoft may sell as many as 10 million copies by the end of the year - half as many as the expected 20 million copies of Windows NT 4.0. Still, most analysts interviewed characterized sales as slow.

Also holding back Windows 2000 are problems that some corporations are having in setting up Active Directory. Active Directory design can take up to 15 months in complex environments, said Silver. He said he expects most U.S. corporations to have some Windows 2000 installations by next year's first quarter.

Separately, Microsoft is preparing to launch on Oct. 11 the first beta version of Whistler, a Windows upgrade due sometime next year. Whistler will be the first Windows version to include some of the next-generation technologies that are part of the Microsoft.Net strategy. These will include an early version of a new browserlike graphical user interface aimed mainly at consumers.

Domenick Branciforte, enterprise architect at Royal & SunAlliance in Charlotte, N.C., said he will be watching the beta testing closely. "The real driver for us to evaluate the beta of Whistler will be to provide the best platform for the new Visual Studio.Net developer tools," said Branciforte. The .Net concept is already leading the insurance company to focus developer training on XML and Simple Object Access Protocol, two key components of Microsoft.Net.

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